Important Points you need to Know about Income Tax Filing

Updated: Apr 8

What exactly is ITR?


The Income Tax Return, or ITR, is a document used by taxpayers to report their income and tax payments to the income tax department. A taxpayer must submit an ITR on or before the due date. The ITR form relevant to a taxpayer is determined by the kind of taxpayer, such as individuals, HUFs, corporations, and so on, and you choose the ITR depending on the nature and type of income as well as total income. Before filing the ITR, every taxpayer should calculate the tax owed and make payments. In the event of a carry forward of losses and set off of carried forward losses, you must submit an ITR.


When submitting your ITR, go through form 26AS for information on TDS and other income, such as FD interest. You should also have your form 16 to fill out the details of your pay and tax saving deduction claims.


ITR Types


Based on the kind of taxpayer and income, the government specifies seven different ITR forms:


  • Individuals residing in India with a total income of up to Rs 50 lakh should file Form ITR-1. Individuals with income from salary, residential property, and other sources are eligible to submit ITR-1. ITR-1 cannot be filed by an NRI. Salaried taxpayers may submit their ITR using Form 16.


  • Individuals and HUFs must file ITR-2 for any income other than income from a business or profession. Individuals and NRIs with income from wages, real estate, capital gains, and other sources are eligible to submit ITR-2. Salaried persons who have profits or losses from stock purchases and sales should complete Form ITR-2.


  • ITR-3 is used by people to declare their earnings from a company or profession. Salaried persons who earn money from intraday trading in stocks or from futures and options must submit Form ITR-3. Individuals may utilise ITR-3 to record income from salary, real estate, capital gains, business or profession (including presumptive income), and other sources.


  • Individuals, HUFs, and partnership businesses must file Form ITR-4 to report their income under the presumptive taxation structure. ITR-4 is used to report revenue from a firm with a turnover of up to Rs 2 crore that is taxed under section 44AD. In addition, ITR-4 is for income from a profession with a turnover of up to Rs 50 lakh that is taxed under section 44ADA. ITR-4 may be filed by a freelancer who works in a notified profession.


  • ITR-5 forms are available for partnership businesses, LLPs, AOPs, and BOIs. Business entities such as LLPs, partnership companies, AOPs, and BOIs may submit ITR-5 to disclose revenue from their businesses and professions as well as any other source of income.


  • ITR-6 is the income tax return used by businesses to report income from their company or profession, as well as any other sources of revenue.


  • ITR-7 is the income tax return for corporations, partnerships, and trusts that seek income tax exemption.

ITR Frequently Asked Questions


My income is already subject to TDS; do I need to pay any more tax while completing my ITR?


TDS on income may vary from the actual tax due on earned income. TDS rates are often a predetermined proportion of payments, while your income is taxed at slab rates. If the TDS is smaller, you may be required to pay the remaining tax. If the TDS is too high, you may be eligible for a refund. In any event, while completing your ITR, you should total your yearly income from all sources and determine the tax due/refund claim.


Is there any interest owed on the tax owed based on my yearly income?


If your tax due before claiming TDS exceeds Rs 10,000, you may be liable for interest. The interest obligation is 1% each month determined on the tax balance. You may lower your interest obligation by paying your taxes on time. Before submitting the ITR, you must pay the remaining tax as well as any interest owed.

You may avoid paying interest by organizing your tax payments under 'advance tax' throughout the fiscal year.


How can I seek a tax rebate under Section 87A and a TDS refund?


If your total income after tax deductions and exemptions is less than Rs 5 lakh, you may receive a tax refund. The maximum rebate available is Rs 12,500. In this scenario, you may request a refund of the TDS you paid on your income.


Should I file an ITR if I suffer a loss from a company, a home, or the sale of stock?


Yes, you should submit an ITR if you have losses from a company, the sale of stock, or interest paid on a house loan. An ITR filing allows you to set off the loss and carry it forward to future years. Please keep in mind that you must submit your ITR on or before the due date.


What is the penalty for submitting an ITR after the deadline?


The late cost is Rs 5,000 for submitting a return beyond the due date but before December 31, 2020. For the fiscal year 2020-21, a late charge of Rs 5,000 is levied for returns filed between 1 December 2020 and 31 December 2020. For returns filed between 1 January 2021 and 31 March 2021, the late cost is Rs 10,000.


The late filing charge, however, should not exceed Rs 1,000 if a taxpayer's total income does not exceed Rs 5 lakh.



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